Subrogation action and insolvency proceedings

Abstract

The creditor, by the mere fact of holding a claim, has the right of subrogation, which allows them to exercise the debtor's rights that are currently dormant. The debtor must act in good faith in managing their assets and therefore cannot refrain from acquiring assets or exercising actions or rights that could maintain the solvency of their estate. The subrogation action is thus aimed at making the universal patrimonial liability of article 1911 of the Civil Code feasible. The subrogation action is a subsidiary action, as the creditor is exceptionally entitled to act in another's legal sphere, but it is not necessary to have previously pursued unsuccessful enforcement against the debtor's assets. To exercise this action judicially, it is necessary to have attempted a prior ADR (Adequate Dispute Resolution) procedure between the creditor and the debtor of the debtor. It is not necessary in this process to sue the debtor, but it is necessary to prove the non-existence of assets through certificates from public registries. The Consolidated Text of the Insolvency Law regulates a version of this action by granting creditors subsidiary standing to bring actions concerning the assets of the insolvent debtor when the debtor or the Insolvency Administration, as the case may be, remains inactive. The creditors litigate on behalf of the estate. The Insolvency Administration also has subsidiary standing if the insolvent debtor is subject to mere intervention in their powers of administration and disposal. This standing would exclude that of the creditors, as concurrent actions by the Insolvency Administration and the creditors would not be permitted.